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Insolvency Service battling charity publishing scams 16 February 2009

Millions of pounds has passed through the companies, almost exclusively based in the North West, which are then abandoned and wound up by the PIU.

Last week Wesley Gregory of Manchester, previously a director of Global Media Limited, received a director’s disqualification order for eight years. Global Media raked in £300,000 over a two month period to produce ‘safety awareness booklets’ and donate the proceeds to a children’s cancer charity. No booklets were produced, and no donation was made – the company was abandoned, investigated by the Companies Investigations Branch (CIB) and then wound up by the PIU. No funds have been recovered.

Support publishing companies solicit funds from small businesses for advertisements in publications, implying that the monies paid by advertisers will be applied to good causes. Typical is Regents House (UK) Limited, which peddled adverts on its ‘safety wallplanner’ through cold-calls to businesses. The telephone calls were recorded, and any hint of a verbal agreement resulted in businesses receiving an invoice immediately followed by a final demand from Unified Debts Services, a trading name of Regents House. Firms then received threatening phone calls and letters enclosing excerpts of recordings. Many businesses paid up, and the company turned over £425,000 over a three month period before being wound up by the PIU.

These are highly lucrative operations: Barrington House Publishing Corp brought in £3.5m over a two year period, but failed to produce or distribute any material. Red Sky Creative Media, Bolton, which was wound up by the PIU in January, received £76,000 over a 77 day period. Taylor Tanner Publishing, based in Newton Heath, Manchester, turned over £580,000 in a year.

The rewards are clear, but penalties are minimal - the companies’ directors are generally targeted for disqualification, and receive disqualification orders ranging from five to fifteen years, but not before they have banked hundreds of thousands of pounds. Once a company is wound up, another is started with the same ‘customer’ lists and a different director. The Insolvency Service is powerless to prevent the new company trading, and finds itself one step behind – clearing up last year’s companies. Insolvency practitioners are not interested in the work as there are no assets, no accounting records and uncooperative directors.

Typical is Andrew Bates, who currently runs Education Support Publications. He has 20 telesales staff who call small businesses asking whether they want to sponsor ‘drug and safety awareness booklets’, and is making £15,000 a week in sales. He previously ran two similar companies, both of which have been wound up in the public interest by the Insolvency Service. Education Support Publications were unavailable for comment.